Guosheng Securities: Economic growth falls again in August. How to view and handle it?

Guosheng Securities released a research report stating that overall, the economy saw a slight decline in August, with both supply and demand weakening. In addition to the continued resilience of external demand, domestic demand (consumption, investment) declined again, and supply (industrial production, manufacturing) also slowed down, with both supply and demand weakening. With the expansion of the PPI decline and the year-on-year growth of credit and social financing shrinking, the increasingly severe issue of weak domestic demand is becoming more evident, with constraints on the supply side gradually emerging. Key points from Guosheng Securities: Looking ahead, the pressure to "maintain 5%" for the whole year is further increasing, and policies need to be "continuously and more vigorously implemented." In terms of GDP, based on data from July and August and seasonal projections, the GDP growth rate in the third quarter is likely to be lower than the second quarter's 4.7%. The fourth quarter is also unlikely to show significant improvement, indicating a further increase in the pressure to "maintain 5%" for the whole year. In terms of domestic demand, overall weakness is expected to persist: the internal repair of household businesses is expected to remain slow, and consumption and real estate are still weak; local government debt remains strict, physical construction in infrastructure is challenging to improve; Regarding external demand, recent signs of slowing down in the US economy, but the extent may be relatively mild, plus possible support for "export grabbing," indicating that China's exports may remain relatively strong in the coming months, but the readings may decline. In terms of policies, the central government recently emphasized "efforts to achieve the annual economic and social development goals," and incremental policies are expected to continue to be implemented, especially the central government's leverage (expanding fiscal deficit/special national bonds/reducing reserve requirements and interest rates/reducing mortgage rates/real estate inventory expansion, etc.). Specifically, the economic data for August has the following characteristics: 1) Consumption side: declining again. In August, year-on-year social retail sales increased by 2.1%, a decrease of 0.6 percentage points from the previous value and lower than the market expectation of 2.7%; seasonally adjusted monthly decline of -0.01%, a decrease of 0.27% from the previous value, indicating a slight weakening in consumption. In terms of specific goods, the consumption growth rates of home appliances, clothing, and communication equipment rebounded, possibly related to subsidies for replacing old items and summer travel; the consumption growth rates of furniture, building materials, and beverages declined more, possibly related to the downturn in the real estate market. In terms of high-frequency indicators, personnel mobility in early September seasonally rebounded, and the resilience of automobile consumption remained stable, with overall consumption remaining stable. 2) Investment side: real estate stabilizes, while infrastructure and manufacturing decline. Fixed asset investment in January-August increased by 3.4% year-on-year, a decrease of 0.2 percentage points from the previous value, slightly lower than the market expectation of 3.5%, seasonally adjusted monthly increase of 0.16%, a slight increase from the previous -0.17%. Real estate volume stabilizes and prices drop. From January to August, the year-on-year sales area and sales volume of commercial housing decreased by -18.0% and -23.6% respectively, with an increase of 0.6 and 0.7 percentage points from the previous value. The cumulative year-on-year new construction, construction, and completion areas of houses were -22.5%, -12.0%, and -23.6% respectively, with the decline in new construction narrowing slightly, construction remaining stable, and completion decreasing slightly. In August, the year-on-year price decline of second-hand houses in 70 cities expanded to -8.6%, and the month-on-month price decline slightly expanded to -0.9%, indicating a continued rapid decline in prices. Manufacturing slows down from a high level. From January to August, manufacturing investment increased by 9.1% year-on-year, a decrease of 0.2 percentage points from the previous value, possibly due to the continued weakness in domestic demand and low capacity utilization rate. By industry, the growth rates of the non-ferrous, transportation equipment, and automobile industries rebounded, while the growth rates of the electrical machinery, food, and pharmaceutical industries declined significantly. Infrastructure declines again. From January to August, the year-on-year growth rates of broad and narrow infrastructure investment were 7.9% and 4.4% respectively, a decrease of 0.3 and 0.5 percentage points from the growth rates in January-July, dropping again after a temporary rebound in July, possibly due to the strict control of local government debt. In terms of high-frequency indicators, the asphalt commencement rate in August-September and the cement delivery rate fluctuated at the bottom, indicating that the physical workload remains low. 3) Supply side: Industrial production has slowed down for four consecutive months. In August, the year-on-year growth rate of industrial value added was 4.5%, a decrease of 0.6 percentage points from the previous value and lower than the market expectation of 4.7%, related to the base effect; seasonally adjusted monthly increase of 0.32%, a slight decrease from the previous 0.35%, indicating a slight slowdown in industrial production. The growth rate of the service industry production also slightly declined. By industry, the growth rates of electricity and heat supply, beverages, and pharmaceuticals increased slightly; the growth rates of electronic equipment, non-ferrous metals, chemical products, and non-metal mineral products declined the most, possibly due to the impact of high temperatures and extreme weather on the slowdown in real estate and infrastructure construction. 4) Employment side: Unemployment rate slightly increased. In August, the urban surveyed unemployment rate was 5.3%, with a slightly higher rate of 5.4% in 31 large cities, mainly influenced by the graduation season and the recent increased economic pressure. Risk Warning: Unexpected changes in policy intensity, overseas economic environment, geopolitical conflicts, statistical errors, and recalibrations.